Formic Acid Plummets Then Stabilizes

May 6th, news:

According to the commodity market analysis system, the recent Chinese formic acid market has shown a pattern of "first rapidly bottoming out, then continuously consolidating." As of May 7, the benchmark price for 85% industrial-grade formic acid in China is 2,400 CNY per ton, down 20% month-over-month and 20.88% year-over-year.

April 27th was a critical turning point for the downward trend in formic acid prices, with the market experiencing a significant plunge. On that day, the average transaction price of 85% concentration formic acid in China fell to 2,400 CNY/ton, a substantial decrease of 7.69% from the previous working day, setting a new low for recent times. This round of price decline was not sudden; some formic acid manufacturers had already started to sell at lower prices over the weekend, actively reducing profits to clear inventory, which directly became the main reason for the drop in market prices. The weakness in demand further amplified the downward pressure. At that time, the wait-and-see sentiment among downstream end-users was strong, with most buyers expecting further price declines and showing low willingness to stock up, only making small purchases to meet immediate needs. Overall, the market transactions were sluggish, and the imbalance between supply and demand pushed formic acid prices to quickly bottom out. After hitting the bottom, the formic acid market rapidly stabilized, entering a continuous sideways consolidation mode starting from April 28th.

After the May Day holiday, on May 6th, the operating trend of China's formic acid market did not show any significant changes, still maintaining a stable sideways pattern. The mainstream transaction average price of 85% formic acid remained steady at 2400 CNY/ton. The supply and demand structure of the market before and after the holiday was basically balanced, with no positive news such as production cuts or shortages on the supply side, and the supply of goods remained abundant and stable. There were slight positive changes in inventory levels, with some manufacturers seeing a decrease in inventory during the holiday due to the concentrated shipment of low-price orders before the festival, slightly easing the industry's inventory pressure. However, there was no substantial recovery in demand, with downstream terminals still mainly engaging in rigid demand procurement. The overall market trading pace was slow, lacking strong momentum for a significant price increase.

Looking at the spot market, the current formic acid market has completed its phased bottoming-out process, with the room for further price declines significantly narrowing. In the short term, prices are likely to continue trading sideways at low levels. At present, the core market contradiction remains the mismatch between supply and demand. The situation on the supply side—where supply is ample and inventory levels remain relatively high—has yet to change fundamentally, thereby continuing to weigh on price increases. Meanwhile, the persistently low price level has effectively capped the downside, preventing the market from continuing its downward trend.

Looking ahead, the formic acid market trend will highly depend on the recovery strength of downstream demand. If the operating rates of terminal industries in China increase and there is a concentrated release of restocking demand, it could drive a recovery in market transactions, pushing prices to stabilize and rebound. However, if demand remains weak, the market may continue to exhibit a weak pattern characterized by "stable quotes but actual discounts." Specific attention still needs to be paid to the changes in supply and demand in the Chinese market.